Under new government measures to boost the economy, the $20,000 instant asset write-off has now been extended until end of June 2018. So what does it all mean?
What is the $20,000 Instant Asset Write-off?“All small businesses will get an immediate tax deduction for any individual assets they buy costing less than $20,000.”
- The 100% tax deduction applies to any item used for running the business.
- The $20,000 limit applies to each individual item purchased. There is no limit to how many items can be claimed by a business within this period.
- Purchases made between 7:30pm May 12th 2015 and June 30th 2018 can be claimed.
What equipment is covered?
- Any asset or equipment used for running the business.
Who is eligible?
- Small businesses with an annual turnover of less than $10 million
What is the purpose of the new generous small business tax deductions?
- To encourage small businesses to invest in assets
- Boost the economy
- Increase opportunity and productivity for small businesses
- Improve cash flow and bring forward investment
What about items over $20,000?
- More expensive items may still be eligible for the normal small business depreciation arrangement.
- Small businesses also receive a tax cut of 1.5 percent (down to 28.5%) which is the lowest rate for small businesses in 50 years meaning more disposable funds for investment.
* Please consult with your tax agent or accountant to ensure you are making an informed decision. Further information is available from ATO website.